MarketIntelligenceCenter.com's patented algorithms have identified an attractive covered-call trade on Xilinx Inc (XLNX). Look at the Jun. '15 $39.00 covered call for a net debit in the $37.22 area. This trade has a duration of 127 days. The...

Analysts at Nomura downgraded Xilinx Inc. (NASDAQ: XLNX) from Buy to Neutral.
Xilinx shares have declined 14.09% over the past 52 weeks, while the S&P 500 index has gained 15.14% in the same period.
Xilinx's shares rose 0.66% to close at...

In early trading on Thursday, shares of eBay (EBAY) topped the list of the day's best performing components of the Nasdaq 100 index, trading up 3.8%. Year to date, eBay has lost about 1.3% of its value.

NEW YORK (TheStreet) -- Shares of Xilinx
are down 9.78% to $37.45 after Drexel Hamilton downgraded the company to "hold" from "buy" and lowered its price target to $20 from $40, following its third quarter fiscal 2015 earnings results...

F5 Networks, Inc. (NASDAQ: FFIV) shares dropped 13.70% to $108.70 in pre-market trading after the company announced fiscal first quarter 2015 revenue of $462.8 million, below estimates of $467.25 million. The company also issued a weak Q2...

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Xilinx (NASDAQ:XLNX) designs and manufactures semiconductor chips. Xilinx also designs, develops and markets programmable platforms. XLNX also provides design services, customer training, field engineering and technical support.[1]Semiconductor chips are electronic circuits that are built on a specific type of material. They are used in anything that is computerized or uses radio waves. Some of Xilinx's major customers include Sony, IBM , and Siemens. It sells products through sales representatives located primarily in the United States.

A major risk to consider when investing in Xilinx is the current economy. Semiconductors are used in electronic devices, which are expensive. Many people cannot afford such luxuries during this recession and will not be spending as much in the electronics market. Xilinx announced a "restructuring" in April 2009, meaning they plan on expanding their international operations and relocating certain administrative functions. Their expansion into foreign countries now causes their company to be partially based on the economics in these overseas lands. If there is an issue in any one of the countries they base in, (India, Singapore, Japan, Ireland, and Taiwan to name a few), profits may take a hit.

Company Overview

Xilinx operates as a "fabless" semiconductor company, which means they do not own or operate any of the wafer-making facilities. Wafers are needed to make the integrated circuits that Xilinx does produce and sell. Xilinx forms alliances with wafer manufacturers such as Toshiba, Samsung, Seiko, and United Microelectronics Corporation so that it can concentrate its efforts on research, development, marketing, and technical support for its integrated circuits.

Xilinx is the current market leader in the production of PLDs and the manufacture of ASICs, both of which are types of integrated circuits. A programmable logic device (PLD) is standard component, meaning Xilinx sells many of them to many different companies, and the companies program them using their own software. ASICs are Application-Specific Integrated Circuits (ASICs), which are similar to PLDs in function but are custom-made for each client. So, generally, Xilinx's high-volume manufacturing customers purchase ASICs, while lower-volume manufacturing customers purchase PLDs.

Xilinx operates by selling their products to OEMs or distributors who eventually resell to an OEM. An OEM is an Original Equipment Manufacturer, or a company that produces hardware to be sold under another company's brand (http://en.wiktionary.org/wiki/OEM).

Business Segments

Communications (44% of Revenue in 2009)

Xilinx's largest category, Communications, serves customers such as Cisco, Ericsson, and Motorola. Xilinx reported a year-to-year growth rate increase of 2% in this sector. Net revenues from this sector increased in fiscal 2009 compared to the prior year period primarily due to the strength in wireless communication applications. The company reported that sales to customers in the wireless space were particularly strong during 2009 as a result of next generation wireless activity in China. Finally, they explain that the reason there was a decrease in the Communications sector in 2008 was merger and consolidation activity in the market.

Industrial and Other (32%)

This is a broad category covering aerospace, broadcast, scientific, medical, and industrial services.[2] Xilinx reported an increase in 2009 for this sector due to strong sales growth from aerospace and defense and industrial, scientific, and medical applications. They also reported, however, that this growth was "offset considerably by weakness in test and measurement applications."

Consumer and Automotive (16%)

For the automotive sector, Xilinx provides silicon and IP products for in-vehicle infotainment, comfort and convenience, gateway and driver assistance systems.[3] It supplies cost-effective products enabling for converged handsets, digital flat panel displays, and residential set top boxes. In their annual report, Xilinx explains that this sector decreased in 2009 from the comparable prior year due to weaker sales from audio, video and broadcast and automotive applications, which was partially offset by an increase in sales from consumer applications [4]. [5]

Data Processing (8%)

Xilinx reported a decrease in net revenues for this end market in 2009. They claim it is mainly driven by decreases in sales from computing and data processing applications.

Key Trends and Forces

Overseas Production Can Cause Shipment and Other Issues

Xilinx does not produce its own wafers, or semiconductor synthesizing material. Instead, the company prides itself in strategically forming alliances with, usually overseas, manufacturers that produce the needed materials and ship them. There are many potential downfalls with this strategy, as any overseas subcontractors cannot be directly controlled. Any type of fallout, whether natural disaster, government policy, worker uprising, etc., affects shipments and supply. The company would need to find alternative sources for their materials, which would be a huge setback.

Xilinx is Restructuring

In June 2008, the company announced a reorganization decision. Seven percent of their global workforce was eliminated and overall restructuring charges were 22.0 million dollars. Only 2.5 million were facility-related costs, whereas the other 19.5 million was paid in severance and benefits to expelled employees [6].

Xilinx's portfolio consists of fixed income securities with a fair value of approximately 1.24 billion as of March 2009. They place investments with high credit, quality issuers and limit the amount of credit exposure to any one issuer based upon the issuer's credit rating.

Competition

Xilinx's primary rival, Altera, held the top market share prior to 1998 however and both companies are in fierce competition, making the market essentially a duopoly. [7]. Although Xilinx currently holds the largest market share at 51%, Altera has been more efficient in their operational processes, and has reported excellent EBT margins that have surpassed XIlinx's over the past five years [8].
The semiconductor market is essentially a duopoly between Altera and Xilinx. Lattice comes in third holding 11% of the industry. Other, smaller, companies in the market are listed below: